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Old 12-06-2018, 01:42 PM   #1
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Approved for a boat loan, but bank does not like the boat.

Hello:
I got pre-approved for a bank loan and told the bank I was looking for a boat. They were happy with me and set a max loan amount. I was happy and then I found a boat I wanted that was way less then the max amount and told the bank about the boat. They were happy and said that I was still pre-approved. I got on a plane and went and looked at the boat and I was happy. The bank told me by phone that the boat was ok and the loan was approved, just get a survey to determine the value of the boat as it will be used for collateral on the loan.

I started to work on this and the bank called back and asked what year was the engine. The boat is a 1974, and the engine is also 1974, but it was rebuilt in 2015 and has been working just fine for the last 3 years I told the bank. The bank said thanks and hung up. About 2 hours later the bank called back and said that they could not finance this boat as the engine has been rebuilt. This was their policy. I said that was stupid. Equipment wears out and can be rebuilt by a certified mechanic to new standards. They still said sorry.

So far I have spent $1000 to travel to the boat, hotels, rental car etc. They finally told me that even after a survey, they could still say no. I said "so I could have spent another $1000 for a survey which shows that the value of the boat exceeds the value of the loan, and you could still turn me down at the last minute?" The bank said yes.

What a pain in the rear. As a consumer and a member of this bank since about 1970, this just pisses me off. This loan is not about me and my ability to pay, it is simply about a hidden policy that only the bank knows about and will not let it's customers see until you spend tons of money looking at and inspecting something, just to be told at the last second that the boat is not good enough even if it exceeds the value of the loan.

Any thoughts on this or places to finance a 1974 trawler?
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Old 12-06-2018, 01:45 PM   #2
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Old 12-06-2018, 02:23 PM   #3
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Maybe try to take the issue higher up in the bank. Half the older boats out there have rebuilt engines and buyers get loans just fine. If you are only talking to one person, take it a level or two up in mgt.

Otherwise, seek out a different lender.
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Old 12-06-2018, 03:25 PM   #4
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Heaving banked with pretty much every bank in town at some point, I can tell you that the best time to get a bank to say yes is when you would be a new customer to that bank. I got the same response from a bank I had borrowed from, and repaid millions to, when I bought 1965 Delfin. However, the bank that lost my business some years before when they said no, now said yes to get my business back. Just keep looking and you'll find a bank to do your deal.

P.s. this is especially true if there is a new bank in town who is actively building their portfolio.
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Old 12-06-2018, 04:58 PM   #5
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Maybe try to take the issue higher up in the bank. Half the older boats out there have rebuilt engines and buyers get loans just fine. If you are only talking to one person, take it a level or two up in mgt.
Branch manager took it all the way up the food chain. They will not make an exception to this policy. I have requested a list of items that disqualify a boat. The bank said that they want to give me a loan, just not a loan on this boat. Basically, go find something else to buy.
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Old 12-06-2018, 05:09 PM   #6
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Bank of America, last I heard, will not lend money for a boat, new, used or in a land fill doesn't matter to them, they just wont.
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Old 12-06-2018, 05:15 PM   #7
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Greetings,
Mr. m. Gee, do ya think the bank would have told you about any limitations that might affect approval BEFORE you spent the $1K? Ask those higher up the food chain how they feel about withholding information and why it should cost you money to find out the lending "rules".
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Old 12-06-2018, 05:51 PM   #8
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Greetings,
Mr. m. Gee, do ya think the bank would have told you about any limitations that might affect approval BEFORE you spent the $1K? Ask those higher up the food chain how they feel about withholding information and why it should cost you money to find out the lending "rules".
I agree. They should have told me that there are certain boats that are not acceptable. The gal doing all of the paperwork did not know, and was told by the underwriter what questions to ask me once she was finalizing the paperwork. As far as I am concerned, the bank owes me a grand. I still want the boat, I just need to find a lender that will accept a boat of this age.
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Old 12-06-2018, 05:54 PM   #9
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Originally Posted by Marshmallow View Post
Hello:
I got pre-approved for a bank loan and told the bank I was looking for a boat. They were happy with me and set a max loan amount. I was happy and then I found a boat I wanted that was way less then the max amount and told the bank about the boat. They were happy and said that I was still pre-approved. I got on a plane and went and looked at the boat and I was happy. The bank told me by phone that the boat was ok and the loan was approved, just get a survey to determine the value of the boat as it will be used for collateral on the loan.

I started to work on this and the bank called back and asked what year was the engine. The boat is a 1974, and the engine is also 1974, but it was rebuilt in 2015 and has been working just fine for the last 3 years I told the bank. The bank said thanks and hung up. About 2 hours later the bank called back and said that they could not finance this boat as the engine has been rebuilt. This was their policy. I said that was stupid. Equipment wears out and can be rebuilt by a certified mechanic to new standards. They still said sorry.

So far I have spent $1000 to travel to the boat, hotels, rental car etc. They finally told me that even after a survey, they could still say no. I said "so I could have spent another $1000 for a survey which shows that the value of the boat exceeds the value of the loan, and you could still turn me down at the last minute?" The bank said yes.

What a pain in the rear. As a consumer and a member of this bank since about 1970, this just pisses me off. This loan is not about me and my ability to pay, it is simply about a hidden policy that only the bank knows about and will not let it's customers see until you spend tons of money looking at and inspecting something, just to be told at the last second that the boat is not good enough even if it exceeds the value of the loan.

Any thoughts on this or places to finance a 1974 trawler?
Ran into the same problem when purchasing current boat.
1974 is tough enough, my problem was no “Buck Book” value due to limited sales history. After the “crash” banks are very leary of lending money with no history of “book value” in my case only a few of my model were made, although by a current and long time builder. “We would love to make you a loan, would you consider a different boat?” Ended up paying cash (fortunate enough do do so).
Good luck
1974 is a pretty old boat, set aside 50% of purchase price for repairs and updates. They all look good on paper (ask me how I know)
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Old 12-06-2018, 06:13 PM   #10
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Find another lending institution to finance your boat. Then go back to the bank, and tell them they're fired. While I don't think financing a depreciating asset for recreation is a good idea, I have very little use for a bank that offers loans without a clue about what's considered normal and acceptable.

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Old 12-06-2018, 07:31 PM   #11
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Welcome MM. Good advice above.

A thought. Have you asked the bank for a copy of the policy. If they give it to you, then ask why they did not produce this when you were pre approved and why you should not take this issue to your attorney?
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Old 12-06-2018, 07:33 PM   #12
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I am afraid the bank's attorneys will 'eat' your attorney for lunch and still be hungry.
It is not worth the effort.
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Old 12-06-2018, 07:44 PM   #13
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MM,

First of all, I could argue STRONGLY not to finance toys and get into consumer debt, unless it's revenue producing and will carry itself. A sure way to postpone retirement and end up broke. Not that happens to everyone, but most people that I know that have consumer debt are broke. I know nothing about your finances and none of my business so accept my comments as being a general principle.

If you absolutely MUST finance a boat that is an absolute KILLER deal that you may only loose 10% a year on, use real estate as the collateral, get much better terms. Then shop as you wish without the bank interfering.

As for your $1000, file a small claims action, cheap and they might settle. You certainly have a case. Hiring an attorney doesn't work as it will cost you more than you'd recover.
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Old 12-06-2018, 07:50 PM   #14
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MM,

As for your $1000, file a small claims action, cheap and they might settle. You certainly have a case. Hiring an attorney doesn't work as it will cost you more than you'd recover.
Good point.
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Old 12-06-2018, 08:07 PM   #15
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I am not surprised that the boat you picked was turned down. I am surprised it was turned down for rebuilt engines and not for being over 30 years old. The other issue that often disqualifies a loan is buying a boat to live on. Banks are afraid of the legal ramifications should the need to repossess a boat being lived on. Of course nothing stops you from buying it for recreation and then moving on it.
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Old 12-06-2018, 08:12 PM   #16
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Potential borrowers assume the loan officer knows what the bank lending policy states. Besides, banks don’t give out their loan policies to customers. They are for the lenders’ use.
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Old 12-06-2018, 08:15 PM   #17
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Call some boat brokers in your area who are advertising older boats. They'll know who can help you.
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Old 12-06-2018, 08:16 PM   #18
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Potential borrowers assume the loan officer knows what the bank lending policy states. Besides, banks don’t give out their loan policies to customers. They are for the lenders’ use.
That sounds like great customer service. Personally, I'm not a fan of banks and quit using them years ago. There's much better money elsewhere without the hassle.
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Old 12-06-2018, 08:17 PM   #19
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MM, I financed my boat because I can write off the interest.
I think I pay about 7% while earning a bit over 3% in the stock market.
Basically, that means I am getting my loan at about 4%, plus writing off the interest. Now, if I sold stock to pay for the boat, capital gains tax would eat me alive.
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Old 12-06-2018, 08:36 PM   #20
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A coincidence? Seems Engine age is the new "say no" for lenders and insurance companies. Back in September my insurance company dropped me. Reason age of the engines or proof I had re-powered within the last 12 months.
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